A strong first half of the year has given owners, operators and forecasters renewed confidence in the outlook for the US hotel sector. That optimism spanned the duration of this week's NYU International Hospitality Investment Forum in New York, where CoStar and Tourism Economics upgraded their forecast for 2026.
By how much? As Jan Freitag, CoStar's national director of hospitality analytics says: "A lot."
The revised 2026 forecast rose from a 0.6 percent RevPAR gain in January to a whopping 2.8 percent today. That upgrade was driven by a dramatic projected increase in demand which is now forecast to grow by 1.3 percent, compared with 0.4 percent previously. Occupancy expectations have also improved, rising from 62.1 percent to 62.8 percent, while ADR growth is projected to double from 1 per cent to 2 per cent.
But with inflation projected to exceed that number, Freitag said the pressure on owners and operators will continue to be about managing expenses in the middle. While revenue growth is accelerating, inflation is still expected to outpace performance growth, leaving operators under continued pressure to control costs.
“This is going to continue the conversation that we've had for the last year… about margin pressure. How do we make margins stick?” he said.
Constrained supply
CoStar and Tourism Economics also lowered their expectations for supply growth in 2026, from a projected 0.7 per cent in January to 0.4 per cent now.
But Freitag noted the revision reflects the increasingly difficult development environment rather than any weakening in demand fundamentals.
“A lot of you are trying to figure out how much it costs to build and what the interest rates look like. The number of rooms under construction continues to decelerate. It's really hard to get anything done right now," Freitag said, noting that outside a handful of high-growth markets such as Nashville, Dallas, Houston, Phoenix and Denver, development activity remains challenging.
Despite the uneven development landscape, the outlook across hotel segments is improving. Luxury continues to outperform while economy remains under pressure, although all chain scales are now forecast to deliver positive revpar growth in 2026. Freitag also highlighted the continued resilience of the middle of the market, particularly upper-midscale and midscale hotels.
Resilient demand
Adam Sacks, president of Tourism Economics, set the table for the hospitality economics discussion by pointing out the various tailwinds including geopolitical uncertainty, rising inflation, a softening labor market, diminished international inbound to the U.S., and high fuel costs. But he also painted an optimistic picture for the rest of the year.
“Travel continues to prevail," Sacks said. "Despite the turbulence that we see, we do expect tailwinds to prevail.”
As proof, Sacks pointed out positive momentum in international inbound travel, supported by major events.
“We're going to start to see modest growth in international travel in the U.S.," he said. "We're going to go from that drag on room demand that we experienced in 2025 to at least net a slight positive.”
While Robert O’Leary, deputy assistant secretary for travel and tourism at the National Travel and Tourism Office emphasized the economic significance of travel to the US economy, questions remain over the extent to which upcoming mega-events will translate into hotel demand, with Brett Horton, chief advocacy officer at the American Hotel & Lodging Association noting that some World Cup host markets are seeing bookings trail initial expectations.
Horton suggested local policies and visitor perceptions may be limiting enthusiasm in certain destinations, although efforts are underway to address those concerns. Nevertheless, he argued that the tournament will provide valuable lessons ahead of even larger events, including the 2028 Olympic and Paralympic Games in Los Angeles.
Positively, Sacks also noted Tourism Economics holds the view, as do notable airline CEOs, that higher air fares are unlikely to cause a pullback in air travel.
Beyond the room
For Michael Grove, CEO of Hotstats, the most encouraging story is the performance of ancillary income streams, with food and beverage up 4.5 percent YoY, wellness up 5.6 percent, conferences and events up 6.3 percent and golf up 9.2 percent.
Grove said these segments offer an increasingly important lever for owners seeking to offset rising operating costs.
"We have so many major events in the country this year that we should continue to see that grow," he said.
He argued that hoteliers need to focus on maximizing total spend rather than concentrating solely on RevPAR.
"RevPAR growth is great, but guests actually spend a lot more on property," Grove said. "We should be maximising that opportunity in order to offset the cost challenges that we're going to continue to face."
It seems the overall message is that demand remains resilient, new supply remains constrained and while margin pressure is unlikely to disappear, revenue opportunities are extending beyond the guestroom.